In any mortgage situation, no matter the format you’re using, credit score is a big deal. It will qualify or disqualify you from certain types of loans, and will be perhaps the largest individual factor in determining what type of mortgage rates you receive.
One thing we’ve realized after years as a top notch mortgage company, however, is that many people don’t really understand how credit score works. There’s more than one version, and there are a few details to be aware of. Let’s look at the basics.
In today’s day and age, there are two credit score metrics used most commonly: FICO® and VantageScore. We’ll get to the details on each of them in a moment, but before we do, it’s vital to know one thing about both these metrics: They both update over time, and not all financial institutions receive these updates at the same time.
What this means is your score may vary between different institutions, possibly by a large amount. FICO® score, for instance, is very different under the FICO® 8 format than the newer FICO® 9, but there’s no guarantee all institutions will be up to date here.
FICO® Versus VantageScore
FICO® is the older of the two metrics, and is more widely accepted within the lending community. VantageScore is a newer metric designed by three credit bureaus, and it’s becoming more widespread among both consumers and lenders. Here are a few of the key differences:
- VantageScore disregards collections that have been paid, while many versions of FICO® score do not.
- FICO® score requires six months of past credit to receive a score, but VantageScore only requires 30 days.
- FICO® score requires a credit account in use within the last six months, while VantageScore allows any active account within the last two years.
Get Them Free
Federal tax rules contain provisions regarding deducting mortgage interest paid on two or more residences at the same time. If you’re financing a second home, you can typically deduct interest on federal taxes up to $1 million in value.
There’s a big misconception in the credit world that you can’t get free access to your score. This is false, and there are numerous online resources for both borrowers and lenders alike.
Want to learn more about credit score and how it’s calculated? Speak to the brokers at Primary Residential Mortgage today for this and more information on all our services.
*The views and opinions expressed are my own and do not necessarily represent the official policy or position of Primary Residential Mortgage, Inc.